Declaration of Conformity

The Board of Management and Supervisory Board of BayWa AG last issued an (updated) Declaration of Conformity on 8 May 2024 pursuant to Section 161 of the German Stock Corporation Act (AktG).

The Board of Management and Supervisory Board of BayWa AG declare pursuant to Section 161 of the German Stock Corporation Act (AktG) that BayWa AG has complied and will comply with the recommendations of the Government Commission on the German Corporate Governance Code in the version published in the Federal Gazette on 27 June 2022 dated 28 April 2022 (hereinafter referred to as the “Code”) since the last (updated) Declaration of Conformity was issued, with the following exceptions within the time frame specified in each case:

1         Age limit for members of the Board of Management (Recommendation B.5)

Section B.5 of the Code recommends setting an age limit for members of the Board of Management and stating this age limit in the corporate governance declaration.

In the past, these recommendations were not complied with in order to avoid restricting flexibility in the selection of suitable candidates for Management Board positions by setting age limits.

The Supervisory Board has now set a standard age limit of 65 years at the time of appointment of members of the Management Board and will state this in the corporate governance declaration. None of the members of the Management Board exceeded the specified standard age limit at the time of appointment. The recommendation in section B.5 of the Code is therefore fully complied with today and in the future.

2         Objectives for the composition of the Supervisory Board and competence profile for the entire Board (Recommendation C.1 sentences 1, 4 and 5)

Section C.1 sentence 1 of the Code recommends that the Supervisory Board should specify concrete objectives for its composition and develop a profile of skills and expertise for the Board as a whole. According to Section C.1 sentence 4 of the Code, proposals by the Supervisory Board to the Annual General Meeting should take these objectives into account and at the same time aim to fill out the competence profile for the entire Board. In addition, pursuant to Code Item C.1 sentence 5, the status of implementation is to be disclosed in the form of a skills matrix in the corporate governance declaration.

To date, the Supervisory Board of BayWa AG has refrained from naming specific objectives for its composition, developing a profile of skills and expertise for the entire Board and disclosing the status of implementation in the form of a skills matrix in order to avoid restricting flexibility in the selection of suitable candidates for the Supervisory Board.

The Supervisory Board is currently working on concrete objectives for its composition and the development of a profile of skills and expertise for the entire Board, which also takes into account the specific requirements resulting from the current situation of the company and the upcoming restructuring measures. Both are to be resolved in the near future and taken into account and published in accordance with the recommendations of the Code. The recommendation in section C.1 of the Code will therefore be complied with in future.

3         Age limit for Supervisory Board members (Recommendation C.2)

Section C.2 of the Code recommends setting an age limit for Supervisory Board members and disclosing this in the corporate governance declaration.

In the past, these recommendations were not complied with in order to avoid restricting flexibility in the selection of suitable candidates for the Supervisory Board by setting age limits.

The Supervisory Board has now set a standard age limit of 70 years at the time of the election of Supervisory Board members. The standard age limit of 70 years was already observed in the last Supervisory Board election. The recommendation in section C.2 of the Code is therefore fully complied with today and in future.

4         Maximum limit for Supervisory Board mandates (Recommendation C.4)

According to the recommendation in Section C.4 of the Code, a Supervisory Board member who is not a member of the Board of Management of a listed company should not hold more than five Supervisory Board mandates at non-group listed companies or comparable functions, with one Supervisory Board chairmanship counting twice.

None of the members of the Supervisory Board of BayWa AG holds more than five supervisory board mandates at non-group listed companies. However, two members of the Supervisory Board of BayWa AG are members of the supervisory bodies of more than five non-Group companies, which may involve comparable functions. The company does not wish to forego the expertise of these two Supervisory Board members. Taking into account all circumstances and, in particular, the unclear definition of the term “comparable function” within the meaning of Section C.4, a deviation from this recommendation is therefore declared as a precautionary measure.

5         Deadline for the disclosure of financial information (Recommendation F.2)

Section F.2 of the Code recommends that the consolidated financial statements and the Group management report should be publicly accessible within 90 days of the end of the financial year and that the mandatory interim financial information should be publicly accessible within 45 days of the end of the reporting period.

These recommendations have been and will be deviated from in connection with the publication of the half-year financial report for the first half of 2024, the publication of the consolidated financial statements and the Group management report for the 2024 financial year and the publication of the quarterly statement for the first quarter of the current 2025 financial year. The publication of the half-year financial report 2024 was delayed until 27 September 2024, as it became necessary to carry out (unscheduled) impairment tests (see the ad hoc announcement dated 24 July 2024). The publication of the 2024 consolidated financial statements and Group management report will be delayed as a result of the implementation of the StaRUG procedure. In this context, the publication of the quarterly statement for the first quarter of 2025 will also be slightly delayed.

However, BayWa AG intends to fully comply with the recommendations in Section F.2 of the Code again from the half-year financial report onwards.

6         Proportion of long-term variable remuneration in relation to total variable remuneration (Recommendation G.6)

Section G.6 of the Code recommends that the variable remuneration resulting from the achievement of long-term targets should exceed the proportion of short-term targets.

The Management Board service agreement with Reinhard Wolf only provides for fixed remuneration. Reinhard Wolf had a service contract with the (then) Group subsidiary RWA AG until 30 November 2024 and was remunerated solely by RWA AG. In order to be able to devote himself fully to BayWa AG in the current situation, Reinhard Wolf's position on the Board of Management of RWA AG was terminated with effect from 1 December 2024 and a Board of Management service contract was concluded with BayWa AG with a term until 30 September 2025. The Board of Management service contract does not provide for any variable remuneration, as the Supervisory Board is of the opinion that the short-term and long-term variable remuneration components provided for in the current remuneration system do not fit the current situation of BayWa AG or the time limit of his Board of Management service contract. The Board of Management activities of Michael Baur, who was appointed to the Board of Management as Chief Restructuring Officer on an interim basis for the restructuring phase of BayWa AG, are part of a service agreement between BayWa AG and AlixPartners Ltd, London, Swiss Branch, Zurich. The service agreement does not provide for long-term variable remuneration, as the Supervisory Board is of the opinion that the long-term variable remuneration components still provided for in the current remuneration system do not fit BayWa AG's current situation or its specific situation. In the case of former Board of Management member Andreas Helber (resigned 31 March 2025), the contractual share of long-term variable remuneration in total variable remuneration was around 49.3% for the financial year 2024, assuming 100% target achievement, and therefore fell just short of the recommendation in Section G.6.

The Supervisory Board intends to generally follow the recommendation in Section G.6 in the future, but reserves the right to deviate from this recommendation in individual cases in order to take appropriate account of the situation of BayWa AG and any special constellations that may arise in the future.

7         Timing of the determination of the performance criteria for variable remuneration components and strategic target orientation of the performance criteria (Recommendation G.7 sentence 1)

According to Section G.7 sentence 1 of the Code, the Supervisory Board shall determine the performance criteria for variable remuneration components for each member of the Management Board for the upcoming financial year. The performance criteria have not yet been determined for the members of the Management Board active at the end of the 2024 financial year and the new members appointed during the 2025 financial year due to the company's situation since summer 2024 and the delay in the restructuring report. The adjustments to the final draft of the restructuring report lasted into the second quarter (see ad hoc disclosure dated 8 April 2025). The key parameters of the restructuring report must be taken into account when deriving the individual targets. Determining the performance criteria will therefore be delayed.

In view of the fact that it is often difficult to draw a clear distinction between strategic and operational objectives, a precautionary deviation from the recommendation that performance criteria should be based primarily on strategic objectives has been and will be declared with regard to the remuneration system currently still in force.

The Supervisory Board intends to provide for strategic objectives in the new Executive Board remuneration system to be presented to the 2025 Annual General Meeting, insofar as this is possible and sensible in the upcoming restructuring phase, and thus to generally follow the recommendation in Section G.7 of the Code in future. However, it reserves the right to deviate from this in individual cases in order to take appropriate account of the situation of BayWa AG and any special constellations that may arise in the future.

8         Share-based variable remuneration and vesting date (Recommendation G.10)

According to the recommendation in Section G.10 of the Code, variable remuneration amounts granted should be invested primarily in shares in the company or granted on a share-based basis, taking into account the respective tax burden. In addition, the Management Board member should only be able to dispose of the long-term variable amounts granted after four years.

The remuneration system currently still in place for members of the Board of Management does not provide for any share-based variable remuneration components or corresponding share investment obligations, as BayWa AG had doubts about the suitability of the share price as an indicator of sustainable and long-term performance development. In addition, the administrative expenses associated with share-based remuneration and investment obligations as well as the resulting insider trading issues were shied away from. In addition, the Executive Board remuneration system currently still in force stipulates that the long-term variable grant amounts are paid out over a period of three years, as this was considered appropriate in the specific case. Accordingly, the recommendation in section G.10 of the Code has not been followed to date with regard to Executive Board remuneration, insofar as variable remuneration was paid (see section 6 above).

The new remuneration system for members of the Board of Management, which is to be submitted to the Annual General Meeting of Shareholders 2025 for approval, is to take into account the recommendations in Section G.10 of the Code, insofar as this is possible and reasonable in the upcoming restructuring phase. The Supervisory Board therefore intends to generally follow the recommendation in Section G.10 in the future, but reserves the right to deviate from this in individual cases in order to take appropriate account of the situation of BayWa AG and any special constellations that may arise in the future.

9         Withholding or reclaiming variable remuneration (Recommendation G.11 sentence 2)

Section G.11 sentence 2 of the Code recommends that the Supervisory Board should have the option of withholding or reclaiming variable remuneration components in justified cases. Reinhard Wolf's Management Board service contract does not include any variable remuneration due to his short interim period of service (see 6 above). The service agreement with AlixPartners Ltd. relating to Michael Baur's Management Board activities (see 6 above) does not provide for any withholding or clawback option due to his interim activities during the restructuring phase.

The Supervisory Board intends to follow the recommendation in full in future, except in such comparable special constellations. The Management Board service contracts of Dr. Frank Hiller, Prof. Dr. Matthias J. Rapp and Dr. Marlen Wienert provide for a corresponding option.

10       Payment of open variable remuneration components (Recommendation G.12)

According to the recommendation in Section G.12 of the Code, in the event of the termination of a Management Board contract, the payment of outstanding variable remuneration components attributable to the period up to the termination of the contract should be made in accordance with the originally agreed targets and comparison parameters as well as the due dates or holding periods specified in the contract.

The Executive Board service contracts of former Executive Board members Marcus Pöllinger (left on 31 October 2024) and Andreas Helber (left on 31 March 2025) as well as the current Executive Board service contract of Dr. Marlen Wienert contained or contain provisions according to which the bonus bank's credit balance is paid out in full or repayments are to be made in full when the Executive Board member leaves the company. This is based on the idea that a Management Board member who leaves the company loses the opportunity to influence the success of the business and that the Management Board and company generally have an interest in the swift settlement of the contract.

However, the Supervisory Board intends to implement this recommendation when concluding new and extending existing Management Board service contracts. The most recently concluded Management Board service contracts with Dr. Frank Hiller and Prof. Dr. Matthias J. Rapp already comply with this recommendation.

11       Inclusion of Supervisory Board mandates within the Group in Management Board remuneration (recommendation G.15)

If members of the Board of Management hold Supervisory Board mandates within the Group, the remuneration is to be offset in accordance with Section G.15 of the Code.

The fixed salary of the members of the Board of Management of BayWa AG used to cover all activities for companies affiliated with the company. Exceptions to this rule were made for individual, particularly complex mandates and additional remuneration benefits were not taken into account. These exceptions have no longer existed since 1 April 2025.

The recommendation in G.15 of the Code is therefore fully complied with today and in future.

 

Munich, 16 May 2025

BayWa Aktiengesellschaft

 

The Board of Management                                                                  The Supervisory Board